Construction-to-Permanent Loan
Direct definition
A single loan that funds construction and then converts to a permanent mortgage without a second closing.
Written by the Vabasso Mortgage Editorial Team · Reviewed against agency and federal sources · Read our editorial policy for how we research and review mortgage content
Plain-English explanation
Also called a single-close construction loan, it locks the permanent rate up front and eliminates a second round of underwriting and closing costs at conversion.
Why it matters
It reduces cost and interest-rate risk between the build and permanent financing.
Where you may see it
- Loan Estimate
- Construction loan agreement
- Closing documents
A real-world example
You close once on a construction-to-perm loan; after the CO is issued, the loan modifies to a 30-year fixed at your pre-locked rate.
Educational and illustrative only
A common misunderstanding
It doesn't require two separate closings and two sets of closing costs — that's the feature it's specifically designed to avoid.
Ask Vabasso AI
This glossary provides general educational information. Mortgage terminology, qualification methods, forms, timelines, fees, program rules, and legal meanings may vary by lender, investor, loan program, property, occupancy, state, and transaction. Definitions do not represent loan approval, legal advice, tax advice, or a commitment to lend.
- Author
- Vabasso Mortgage Editorial Team
- Reviewed by
- Vabasso Mortgage Licensed Advisory Team
- Last reviewed
- July 30, 2026